|
on Regulation |
| By: | Anindya Sen |
| Keywords: | Energy and Natural Resources, Electricity Pricing |
| JEL: | L94 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:209&r=reg |
| By: | James B. Bushnell; Stephen P. Holland; Jonathan E. Hughes; Christopher R. Knittel |
| Abstract: | Flexibility in environmental regulations can lead to reduced costs if it allows additional abatement from lower cost sources or if policy tailoring and experimentation across states increases regulatory efficiency. The EPA's 2014 Clean Power Plan, which implements greenhouse gas regulation of power plants under the Clean Air Act, allows substantial regulatory flexibility. The Clean Power Plan sets state-level 2030 goals for emissions rates (in lbs CO2 per MWh) with substantial variation in the goals across states. The Clean Power Plan allows states considerable flexibility in attaining these goals. In particular, states can choose whether to implement the rate standards goals or equivalent mass-based goals (i.e., emissions cap and trade, CAT). Moreover, states can choose whether or not to join with other states in implementing their goals. We analyze incentives to adopt inefficient rate standards versus efficient CAT standards using both analytical and simulation models. We have five main results. First, we theoretically show that industry supply can be efficient under both CAT regulation and rate-based regulation. However, under rate-based standards the carbon price must equal the social cost of carbon and the rate standard must be equal across all the states. Second, we illustrate important differences in the incentives of a unified coalition of states and the incentives of a single state. Third, our simulation results show that when states fail to coordinate on a policy, the merit order can be ``scrambled'' quite dramatically leading to significant inefficiencies. Fourth, the Nash equilibrium of a game between coastal and inland western states is an inefficient policy for consumers and an uncoordinated policy for generators. Finally, we show that how new plants are treated under the Clean Power Plan has large effects on the scale and location of entry. |
| JEL: | L5 L9 Q48 Q54 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21259&r=reg |
| By: | Ekaterina Gavenas; Knut Einar Rosendahl; Terje Skjerpen (Statistics Norway) |
| Abstract: | Emissions from oil and gas extraction matter for the lifecycle emissions of fossil fuels, and account for significant shares of domestic emissions in many fossil fuel exporting countries. In this study we investigate empirically the driving forces behind CO2-emission intensities of Norwegian oil and gas extraction, using detailed field-specific data that cover all Norwegian oil and gas activity. We find that emissions per unit extraction increase significantly as a field’s extraction declines. Moreover, emission intensities increase significantly with a field’s share of oil in total oil and gas reserves. We also find some indication that oil and CO2-prices may have influenced emission intensities on the Norwegian continental shelf. |
| Keywords: | CO2-emissions; Oil and gas extraction; Panel data estimation. |
| JEL: | C23 L71 Q54 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:806&r=reg |
| By: | Elisabetta Iossa (DEF and CEIS, Università di Roma "Tor Vergata" - IEFE-Bocconi, CEPR) |
| Abstract: | We review international practice in concession-based public private partnerships (PPPs) for highways, in the light of the economic theory of incentives, procurement and regulation. In particular, we analyse alternative funding mechanisms to cover highway costs, and their impact on demand risk allocation, incentives, cost of capital, and likelihood of renegotiation. We note how real tolls must pursue a number of contrasting objectives, which may be best served by introducing tariff discrimination. We discuss alternative tariff regulations used in practice and warn against tariff mechanisms that transfer demand risk to users and depart from the principles of price cap regulation. We highlight that it is desirable to transfer some traffic risk to the concessionaire but the level of risk transfer should be lower at the beginning of the contract, especially for greenfield projects where little demand information is initially available. We discuss the procurement of highway PPPs, focusing on the choice of the bidding variables, and on the distortions that renegotiations introduce at bidding stage. We stress the importance of strong institutions and absence of political interference in regulatory matters, and we highlight the benefit of respecting and standardizing contract terms. |
| Keywords: | contracting out, highways, incentives, procurement, regulation, transport |
| JEL: | D21 L2 L33 L5 L9 |
| Date: | 2015–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:345&r=reg |
| By: | Emam, Sherief; Grebel, Thomas |
| Abstract: | In this paper we investigate the impact of rising energy prices on technological progress in the market for renewable energies. We use patent data of OECD countries from 1970 to 2010 and test the impact of oil prices on the innovative success of countries; R&D, investment activities, electricity consumption, etc. are used as control variables. We compare several models such as Pooled Mean Group (PMG), Mean Group (MG), Count data (CD) and Dynamic fixed effects (DFE) models to distinguish short and long-term effects. The preliminary results show that increasing energy prices seem to encourage innovation in renewable energy technologies. |
| Keywords: | Renewable Energy,Heterogeneous Dynamic Panel Data,Technological Progress |
| JEL: | Q55 C23 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuiedp:91&r=reg |
| By: | Palmer, Karen (Resources for the Future); Paul, Anthony (Resources for the Future) |
| Abstract: | The US Environmental Protection Agency (EPA) has proposed regulations to reduce emissions of carbon dioxide (CO2)from existing fossil electricity generators in its proposed Clean Power Plan rule under section 111(d) of the Clean Air Act. The proposal is based on the best system of emissions reductions (BSER) and calls for states to develop plans to achieve reductions that are demonstrated to be equivalent to those attained by the application of BSER to each state. Policy options from which states may choose are not restricted - the BSER and state plans are distinct from one another. This primer describes the different types of incentive-based comprehensive policies that states could adopt and how policy design features can address particular objectives including overall cost-effectiveness, distributional consequences for electricity consumers and producers, administrative costs, and emissions of other pollutants. We also elucidate some trade-offs that state policymakers will face as they develop their plans for Clean Power Plan compliance. |
| Keywords: | tradable performance standard, climate policy, clean energy standard, cap and trade, allowance allocation |
| JEL: | Q42 Q48 Q54 Q58 |
| Date: | 2015–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-15-15&r=reg |
| By: | Jaraite, Jurate (CERE); Karimu, Amin (CERE); Kažukauskas, Andrius (CERE); Kažukauskas, Paulius (HIS) |
| Abstract: | Given the intensifying debates whether governments should use industrial policies to promote particular renewable energy technologies, the main objective of this study is to investigate the long-run effects of renewable energy support policies on economic growth and employment in 15 European Union (EU) member states for the 1990-2012 time period by using panel-data time-series econometric techniques. The first hypothesis is that the EU’s renewable energy support policies lead to technological advancement, followed by economy growth, in the long-run. The second hypothesis states that these policies at least generate an increase in output and employment in the short-run. In summary, our results provide some evidence in support of the second hypothesis, but, in contrary to the similar studies, our findings do not support the first hypothesis that these policies promote growth in the long-run. |
| Keywords: | economic growth; EU; Granger causality; panel cointegration; policy; renewable energy |
| JEL: | O44 Q43 Q48 |
| Date: | 2015–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_007&r=reg |
| By: | Hagem, Cathrine; Hoel, Michael; Holtsmark, Bjart; Sterner, Thomas |
| Abstract: | We analyze two mechanism designs for refunding emissions payments to polluting firms - outputbased refunding (OB) and expenditure-based refunding (EB). In both instruments, emissions fees are returned to the polluting industry, typically making the policy more politically acceptable than a standard tax. The crucial difference between OB and EB is that the fees are refunded in proportion to output in the former but in proportion to the firms’ expenditure on abatement equipment in the latter. We show theoretically that to achieve a given abatement target, the fee level in the OB design exceeds the standard tax rate, whereas the fee level in the EB design is lower. Furthermore, the use of OB and EB may lead to large differences in the distribution of costs across firms. Both designs imply a cost-ineffective provision of abatement, as firms put relatively too much effort into reducing emissions through abatement technology compared with reducing output or improving management. However, maintaining output may be seen as a political advantage by policymakers if they seek to avoid activity reduction in the regulated sector. |
| Keywords: | refunded charge, output-based, expenditure-based, NOx, tax subsidy, policy design |
| JEL: | Q28 Q25 H23 |
| Date: | 2015–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-15-05&r=reg |
| By: | Md. Samsul Alam; Sudharshan Reddy Paramati; Muhammad Shahbaz; Mita Bhattacharya |
| Abstract: | This study examines the dynamic relationship between natural gas consumption, output, and trade in a sample of fifteen emerging economies using quarterly data for the period of 1990-2012. We employ the robust panel cointegration techniques and a heterogeneous panel causality test. Our findings confirm the presence of long-run association between natural gas consumption, output and trade. The short-run heterogeneous panel causality test suggests that natural gas consumption has feedback effect between economic growth and international trade. These findings have important implications for energy and environmental policies. The conservation policies that are designed to reduce natural gas consumption have an adverse effect on both economic growth and trade. We suggest future energy policies should focus on improving energy supply, and formulate appropriate channels to attract investments into renewable energy production with greater involvement of public-private partnership initiatives. |
| Keywords: | Natural gas consumption, economic growth, trade, emerging economies |
| JEL: | F14 O47 P28 Q43 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2015-21&r=reg |
| By: | Palmer, Karen (Resources for the Future); Walls, Margaret (Resources for the Future) |
| Abstract: | Building energy use accounted for 38 percent of total US carbon dioxide (CO2) emissions in 2012, and roughly half of those emissions were attributable to the commercial building sector. A new policy that has been adopted in 10 US cities and one US county is a requirement that commercial and sometimes also multifamily residential building owners disclose their annual energy use and benchmark it relative to other buildings. We discuss these nascent policies, preliminary analyses of the data that have been collected so far, and how to evaluate whether they are having an effect on energy use and CO2 emissions. Missing or imperfect information is a contributor to the energy efficiency gap, the finding that many low-cost options for improving energy efficiency fail to be adopted. These new laws may be an important step in closing the gap in the commercial and multifamily building sectors, but careful evaluation of the programs will be essential. |
| Keywords: | energy efficiency, commercial buildings, disclosure, benchmarking, energy use intensity, Energy Star, LEED |
| JEL: | Q40 Q48 |
| Date: | 2015–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-15-09&r=reg |
| By: | Bartekova E.; Ziesemer T.H.W. (UNU-MERIT) |
| Abstract: | In the course of recent years growing concerns over increasing energy prices have emerged in the context of maintaining Europes international competitiveness. In particular, rising electricity price differentials adversely affect firms total production costs and ultimately impact their investment decisions. Nonetheless, electricity prices as locational determinants of foreign direct investment FDI have received little attention in the literature so far. We address this gap by including electricity prices in the traditional framework of FDI analysis and examine the impact of price variation on net FDI inflows in countries of the European Union EU. We use a panel of 27 countries for a period of 2003 - 2013 and system generalised method of moments GMM as method of estimation. The main findings of the paper confirm that besides tax rates, unit labour costs and competitive disadvantage in secondary education, also electricity prices contribute to eroding competitiveness of the countries. Yet, the effect of electricity prices does not seem to be uniform across the EU. In fact, southwestern countries tend to be more adversely affected than north-eastern, both in the short and long run. |
| Keywords: | International Investment; Long-term Capital Movements; Economywide Country Studies: Europe; Energy and the Macroeconomy; |
| JEL: | F21 O52 Q43 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2015021&r=reg |
| By: | Valeria Costantini (Department of Economics, Roma Tre University, Rome (Italy)); Francesco Crespi (Department of Economics, Roma Tre University, Rome (Italy)); Alessandro Palma (Department of Economics, Roma Tre University, Rome (Italy)) |
| Abstract: | This paper provides an empirical investigation of the role played by selected characteristics of the policy mix in inducing innovation in energy efficiency technologies. An original dataset covering 23 OECD countries over the period 1990-2010 combines the full set of policies in the energy efficiency domain for the residential sector with data on patents applied over the same period in this specific technological sector. The evidence of a positive policy inducement effect on innovation dynamics is enriched by the following main results: i) policy mix comprehensiveness is influential since countries adopting different instruments show a relatively higher positive inducement effect; ii) inconsistency problems between the different tools forming the policy mix may negatively influence innovation activities when the variety of policy instruments becomes excessive; iii) the different instruments forming the policy mix need to be well balanced in their relative strength in order to reduce potential negative lock-in effects; iv) the greater the external balance of the national policy strategy with the policy setting of other similar countries, the higher the inducement effect on the technological dynamics of the investigated country. Several suggestions for implementing effective policy strategies can be made in this case study that can be potentially extended to other technology domains. |
| Keywords: | eco-innovation, policy mix, policy spillovers, energy efficiency, residential sector. |
| JEL: | O31 O38 Q48 Q55 Q58 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:1115&r=reg |
| By: | Broberg, Thomas (CERE); Persson, Lars (CERE) |
| Abstract: | In a European perspective, the electricity markets have been experiencing major changes via deregulation, new technologies and changes in the production mix. Together with the daily and seasonal peak hours on the demand side, the changing markets put pressure on increased flexibility to handle and sustain balance in the grid systems. This paper focuses on the demand side and analyzes preferences related to demand management of Swedish households energy use. Preferences are analyzed within the framework of choice experiments and people are faced with hypothetical electricity contracts. The respondents reveal their preferences for attributes related to external control of heating, household electricity and information dissemination (integrity). The results show that people put a substantial value on not being controlled, illustrated by compensations up to thousands of SEK for accepting a contract characterized by external control of energy use in various dimensions. In addition, the results show that household composition, age, gender and income play a role for the perceived discomfort from the external control and information dissemination. |
| Keywords: | choice experiment; demand side management; electricity market; energy policy; demand flexibility; smart grids |
| JEL: | Q40 Q41 |
| Date: | 2015–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2015_006&r=reg |
| By: | Marie-Laure Nauleau (CIRED); Louis-Gaëtan Giraudet (CIRED, Ecole des PontsParisTech); Philippe Quirion (CIRED, CNRS) |
| Abstract: | We compare a range of energy efficiency policies in a durable good market subject to both energy-use externalities and price-quality discrimination by a monopolist. We find that the social optimum can be achieved with differentiated subsidies. With ad valorem subsidies, the subsidization of the high-end good leads the monopolist to cut the quality of the low-end good. The rates should always be decreasing in energy efficiency. With per-quality subsidies, there are no such interference and the rates can be increasing if the externality is large enough relative to the market share of low-type consumers. Stand-alone instruments only achieve second-best outcomes. A minimum quality standard may be set at the high-end of the product line if consumers are not too dissimilar, otherwise it should only target the low-end good. An energy tax should be set above the marginal external cost. Likewise, a uniform ad valorem subsidy should be set above the subsidy that would be needed to spec ifically internalize energy-use externalities. Lastly, if, as is often observed in practice, only the high-end good is to be incentivized, a per-quality schedule should be preferred over an ad valorem one. An ad valorem tax on the high-end good may even be preferred over an ad valorem subsidy if the externality is small enough and low-end consumers dominate the market. |
| Keywords: | energy efficiency, price-quality discrimination, imperfect discrimination, vertical differentiation, subsidy |
| JEL: | H23 Q48 Q54 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:fae:wpaper:2015.11&r=reg |
| By: | Fanny Henriet (Paris School of Economics - Centre d'Economie de la Sorbonne); Katheline Schubert (Paris School of Economics - Centre d'Economie de la Sorbonne) |
| Abstract: | In the context of the deep contrast between the shale gas boom in the United States and the recent ban by France of shale gas exploration, this paper explores whether climate policy justifies developing more shale gas, taking into account environmental damages, both local and global, and addresses the question of a potential arbitrage between shale gas development and the transition to clean energy. We construct a Hotelling-like model where electricity may be produced by three perfectly substitutable sources: an abundant dirty resource (coal), a non-renewable less polluting resource (shale gas), and an abundant clean resource (solar). The resources differ by their carbon contents and their unit costs. Fixed costs must be paid for shale gas exploration, and before solar production begins. Climate policy takes the form of a ceiling on atmospheric carbon concentration. We show that at the optimum tightening climate policy always leads to bringing forward the transition to clean energy. We determine conditions under which the quantity of shale gas extracted should increase or decrease as the ceiling is tightened. To address the question of the arbitrage between shale gas development and the transition to clean energy, we assume that the social planner has to comply to the climate constraint without increasing energy expenditures. We show that when the price elasticity of electricity demand is low, a binding financial constraint leads to an overinvestment in shale gas and postpones the switch to the clean backstop. We calibrate the model for Europe and determine whether shale gas should be extracted, depending on the magnitude of the local damage, as well as the potential extra amount of shale gas developed because of a financial constraint, and the cost of a moratorium on extraction |
| Keywords: | Shale Gas; Global Warming; Non-renewable Resources; Energy transition |
| JEL: | H50 Q31 Q41 Q42 Q54 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15050&r=reg |
| By: | Orhan Dagli (Eastern Mediterranean University, North Cyprus); Glenn P. Jenkins (Queen’s University, Canada and Eastern Mediterranean University, North Cyprus) |
| Abstract: | We employ a choice experiment in order to estimate consumers’ willingness to pay for improvements in mobile services, focusing on 4G upgrades and roaming services. The attributes of an improved mobile service that we investigate in our experiment are: increased mobile internet speed (possible with 4G), unlimited mobile internet use, improved quality (possible with 4G) and unrestrained use in two neighbouring countries (unrestrained roaming). The results indicate that people value unrestrained roaming services the most. Increased speed and unlimited use attributes are next, and are similarly significant at the 1% level. The impact of improved quality is statistically insignificant at the 5% level, suggesting that consumers are content with the current level of quality they receive with 3G. We conclude that bilateral roaming regulation between governments is more valuable than 4G investments. |
| Keywords: | Mobile telecommunication services; choice experiment; willingness to pay; consumer preferences; 4G; roaming |
| JEL: | C5 D12 L96 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:277&r=reg |
| By: | Robert A. Ritz |
| Abstract: | In response to cost changes, prices often rise more strongly or quickly than they fall. This phenomenon has attracted attention from economists, policymakers, and the general public for decades. Many assert that it cannot be explained by standard economic theory, and is evidence for “anti-competitive” behaviour by firms. This paper argues against this conventional wisdom; it shows that simple price theory can, in principle, account for such asymmetric pass-through - even with perfect competition. From a policy perspective, knowledge of cost pass-through patterns in a market does not allow for strong inferences on the intensity of competition. |
| Keywords: | Asymmetric price transmission, cost pass-through, electricity markets, price theory, rockets and feathers |
| JEL: | D40 L11 L94 |
| Date: | 2015–06–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1515&r=reg |
| By: | Arlan Brucal (University of Hawaii at Manoa); Michael Roberts (University of Hawaii at Manoa) |
| Abstract: | We examine the effect of energy efficiency standards on the clothes washers market using a constant-quality price index constructed from same-model price changes for a significant majority of clothes washer models sold in the United States between 2001 and 2011. We find constant-quality prices fell over time, while quality increased, particularly around times energy standards changed. We estimate total welfare changes by assuming the difference between average price and constant-quality price indicates average quality. Further examination shows product entry and exit are associated with changes federal standard for energy efficiency. With policy changes implicitly coordinating entry and exit, average vintage sharply falls when standards change. Controlling for individual model and time effects, we find that lower average vintage is associated with more rapidly falling prices, an effect we attribute to increased competition. We also find a strong relationship between clothes washer prices and average vintage of the same manufacturer, which indicates cannibalism explains much of the declining price of clothes washers over time. We apply the same methodology to other appliances (clothes dryer, room air conditioners and refrigerators) which did not experience simultaneous efficiency standard changes between 2001 and 2011. We see the same cannibalism in the market for clothes dryers, but not for room air conditioners or refrigerators. We also find notable improvements both in the characteristics of clothes washers that directly improve energy efficiency and those that promote convenience and space-saving. Energy efficiency standards appear to facilitate more rapid innovation and price declines. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201506&r=reg |
| By: | Montagnes, B, Pablo; Wolton, Stephane |
| Abstract: | Previous studies of the bureaucracy have focused on the internal relationship between politicians (principals) and bureaucrats (agents). External regulated actors, such as firms, have generally been ignored. But firms strategically respond to their regulatory environment and regulatory uncertainty can deter investment. We examine how concerns about firms' strategic behavior affect the optimal internal organization of the bureaucracy. When regulatory uncertainty is about how much firms will be regulated, the ally principle applies: the principal delegates to an agent with similar preferences as hers. When regulatory uncertainty is about whether firms will be regulated, the ally principle fails to hold: the principal prefers an inefficient rule-based regulatory framework or, if possible, to delegate to an agent with preferences distinct from hers to encourage firm investment. We uncover novel endogenous limits to delegation since the principal faces a commitment problem not to replace a biased agent after the firm investment. |
| Keywords: | Regulatory Uncertainty, Ally Principle, Firm Investment |
| JEL: | D70 D73 D78 |
| Date: | 2015–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65047&r=reg |